Sinclair and the American bid

oil leases for the Russian Baku, anticipating the imminent collapse of an economically isolated and badly damaged Soviet regime.

This was the period of the notorious Lockhart Plot, in which Britain’s Moscow envoy, Sir Robin Bruce Lockhart, together with Sidney Reilly, were tried in absentia and sentenced to death for the August 1918 attempt on Lenin’s life. It was also the period of British and allied military landings at Archangel. British policy, under Churchill’s Colonial Offi ce, had been to back an exile government around the dubious fi gure of Boris Savinkoff, former minister of war under the ill-fated Kerensky regime, and at the time a morphine addict. With the backing of Churchill and the British government, Deterding had channeled large sums of money to a White Russian counterrevolution under the leadership of Generals Wrangel and Denikine, Admiral Kolchak and others, as late as 1920. Deterding had formed the Anglo-Causasian Company in anticipation of his taking the prize of Baku oil. At one point, an increasingly frustrated Deterding even funneled monies to create a Baku separatist movement which was to have honored Deterding’s oil concessions.1

Four years of such covert and overt efforts at overthrowing the new Bolshevik regime had failed to yield results. By 1922, British had shifted their tactics, intending to intersect what London saw as a more pragmatic, though actually desperate, economic policy coming from Lenin’s Moscow, through the 1921 New Economic Program.

SINCLAIR AND THE AMERICAN BID

Determined as Deterding and the British were in 1922 to secure monopoly rights to develop and control the vast Russian oilfi elds, powerful American oil interests, including the Rockefeller Standard group, were equally determined. But by 1922, it appeared that conditions were ideal for the new British approach to Russia. Britain’s chief apparent rival for Soviet oil concessions, the American Sinclair Petroleum Company of Harry Sinclair, was implicated in a conveniently timed scandal which had erupted in the United States over oil leases on the Wyoming Teapot Dome Naval Reserve.

Harry Sinclair, who portrayed himself as an Oklahoma oil ‘independent,’ in reality was a convenient ‘middle man’ for the Standard oil and banking interests to secure markets where a direct Standard bid might arouse suspicion—above all from Britain’s powerful rival Shell group. In the early 1920s, Sinclair was not the ‘maverick’ self-made man he appeared. On the board of directors

of his Sinclair Refi ning Company was Theodore Roosevelt Jr., son of the U.S. former president. Archibald Roosevelt, his brother, was vice president of Sinclair Oil. William Boyce Thompson, director of Rockefeller’s Chase Bank in New York, the bank of Standard Oil, was also on Sinclair’s board.

Harry Sinclair had met with Leonid Krassin, Soviet representative in London in the early 1920s. As a result of their talks, he, together with U.S. Senator Albert Fall and Archibald Roosevelt, went to Moscow, where they negotiated an agreement to obtain the concession to develop the prized Baku fi eld, as well as rights to develop the oil deposits of the Sakhalin Island, and to form a 50–50 joint venture company with the Soviet government, to share equally in the profi ts from its oil sales worldwide. The Sinclair group agreed to invest a sum of not less than $115 million in the project, and to obtain a large loan in the United States for the Russian government. Moscow knew of Sinclair’s close ties to President Harding and the Republican administration in Washington. A U.S. loan required U.S. diplomatic recognition of Russia, breaking the international isolation of the Soviet Union. Sinclair agreed, and Harding was persuaded to accord the Soviet government recognition.

But suddenly in Wyoming, reportedly with the covert encouragement of representatives of Deterding’s rival Shell group, a scandal began to surface, implicating Sinclair, Fall, and even President Harding, involving the granting of lucrative oil leases from U.S. government property at Teapot Dome, Wyoming. In the subsequent media scandals and congressional inquiries, no mention was made of the remarkable coincidence that the Teapot Dome affair hit just as Sinclair and the United States had secured the prized Baku oil concession from right under the noses of Deterding and the British.2

Harding had been about to announce U.S. diplomatic and trade ties with Soviet Russia when the Teapot Dome affair, and Harry Sinclair’s involvement, hit the front page of the Wall Street Journal on April 14, 1922. Within a year, Harding himself had died, under strange circumstances. The Coolidge presidency dropped Sinclair and the Baku project, and with it any plans to recognize Russia. There was more than a little suspicion that the skillful hand of British secret intelligence was active in blocking this American bid to dominate Russian oil development.